By John Kagia, Chief Knowledge Officer, New Frontier Data, and J.J. McCoy, Senior Managing Editor, New Frontier Data
"We are our choices", wrote Jean-Paul Sartre, and no experienced salesperson would disagree. The gap between a company's sales efforts and its core strategies is a huge — even existential — vulnerability.
Understanding that is the key to New Frontier Data's latest release, 2018-2019 Cannabis Consumer Report: Archetypes, Preferences & Trends, a first-of-its-kind examination of today's cannabis consumers intended to support operators and investors in devising their business strategies.
Based on a groundbreaking survey of more than 3,000 U.S. cannabis consumers which explored their attitudes, perceptions, and usage, the report explores the experience of the modern cannabis consumer. Leveraging the wealth of survey data — including demographic profiles, reasons for cannabis use, product preferences, spending habits, and cannabis policy views — the study defines and describes nine distinct cannabis consumer archetypes.
The archetypes take cannabis consumer segmentation beyond the current binary of "medical" and "recreational" users to create richer, more deeply defined profiles which factor in the diverse spectrum of consumers' attitudes, behaviors, experiences, and lifestyles.
Among the survey's revelations is a strong preference for cannabis over alcohol among adults who consume both. Two-thirds (65%) say that, given a choice, they prefer cannabis to alcohol. The survey also found some early signs of cultural drift away from alcohol: While nearly half (47%) of participants said that their drinking had not changed in the past two years, 31 percent said that they now drink less than they used to, compared to 23 percent saying that they drink more. Additionally, almost half (45%) said that they were likely to replace some of their drinking with cannabis in future. Given such, while many cannabis consumers currently drink, for many the displacement of alcohol appears to be a durable trend.
The shifting preference for cannabis is not occurring in a vacuum. It is taking place in the context of a growing body of research about the dangers of drinking. A major global study of alcohol use, published in the British medical journal The Lancet last August, concluded that: "Alcohol use is a leading risk factor for disease burden worldwide, accounting for nearly 10 percent of global deaths among populations aged 15–49 years, and poses dire ramifications for future population health… The widely held view of the health benefits of alcohol needs revising, particularly as improved methods and analyses continue to show how much alcohol use contributes to global death and disability. Our results show that the safest level of drinking is none."
That finding explains in part why major alcohol brands are aggressively entering the cannabis market: They recognize that among a broad base of consumers, increased access to legal markets and the elimination of the punitive risks of cannabis will likely lead to some significant displacement of alcohol due to those consumers' turn toward cannabis.
The evolving views on alcohol relative to cannabis, and the growing number of consumers who prefer and are replacing some of their drinking with the latter could significantly reduce the potential lifetime alcohol spending among today's young adults, who are even more likely than older adults to prefer cannabis to alcohol. Furthermore, younger consumers who have neither developed strong alcohol brand preferences nor developed a discerning palate for alcohol may be more likely to develop a stronger affinity for cannabis as they come of age amid a social environment where cannabis is as equally accepted as alcohol.
The full effect of this generational transition may take a few years to manifest, but its development is one which alcohol brands and retail establishments would be wise to closely monitor.
Thus, the growing acceptance of cannabis is both a challenge and opportunity for alcohol companies. While it may negatively impact long-term sales of their core products, the market opportunity for nonalcoholic, cannabis-infused beers and wines (and more broadly, for well-produced beverages and edibles) is very significant, and remains under-addressed. The expertise of alcohol companies in managing a highly regulated product, operating complex distribution networks, and engaging consumers amidst advertising and marketing restrictions, will be readily applicable to the highly complex and restrictive cannabis industry. Such skills, coupled with generally deep pockets, will give alcohol companies a unique advantage in the next phase of the cannabis industry's growth.
That said, the escalating involvement of alcohol companies in the cannabis industry may also draw more scrutiny from lawmakers and public policy decisionmakers due to growing concerns globally about alcohol's effects on public health.
The post Cannabis Consumer Report Highlights Potential Displacement of Alcohol appeared first on New Frontier.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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